Insights


Into The Mainstream

Our latest research, uncovers the views of more than 300 institutional investors and world-leading institutions, revealing what is driving organizations to adopt ESG and the barriers that must be overcome to deliver the best outcomes.


ESG at the Tipping Point


ESG may well be becoming a mainstream trend, but every institutional investor faces a unique mix of forces pushing them towards, or barriers pulling them away from, ESG investing.


Key Push Factors


1
Fiduciary Duty

Once an uncertainty for many investors, the fiduciary duty aspect of ESG is now very clear, with 46% of respondents seeing it as the key driver.


2
Regulatory

Also at 46%, the other leading driver for many is regulation. It is clear that regulation will increasingly shape future adoption, particularly on topics such as climate.


3
Risk Mitigation

Also at 46%, the other leading driver for many is regulation. It is clear that regulation will increasingly shape future adoption, particularly on topics such as climate.

Dig Deeper

Most Significant Factors Driving Adoption

Globally, the clear top push factors driving ESG adoption are responding to regulation, meeting fiduciary duty and mitigating ESG risks in the portfolio.


What’s Driving Institutions to Adopt ESG? (By Institution Type)

Pension funds are most concerned with reputational risk. Endowments and foundations feel most under pressure from beneficiaries. SWFs are responding to regulatory impetus.

What Frameworks or Initiatives have had the Biggest Impact on ESG Approaches?

Domestic regulation and policy in the domestic market clearly have the biggest impact.

Key Pull Factors


1
ESG Data in Disarray

The current state of ESG data — single sourced, low correlation and confusing terminology — is the main factor hindering adoption.


2
Resource Constraints

Internal resource constraints loom large when it comes to ESG adoption and implementation across asset classes. Every single investor surveyed has plans to employ more ESG resource.


3
Missing Expertise

Allied to resource constraint, for nearly 40% of respondents a lack of expertise in integrating ESG was a key hindrance factor.

Dig Deeper

Most Significant Factors Hindering Adoption

Globally, the availability of reliable and consistent ESG data is the top barrier to deeper ESG integration.

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Base = All respondents (304)

Data is the Number One Factor Hindering Further Adoption

Respondents are unhappy with the quality, coverage and consistency of ESG data.

Resources are Constrained and Expertise is Needed

Every institution surveyed intends to hire in-house ESG specialists within 3 years.


About the Study


In mid-2019 State Street Global Advisors surveyed senior executives with asset allocation responsibilities at over 300 institutions. They included private and public pension funds, endowments, foundations and official institutions. Respondents are directly involved in or influence asset allocation decisions.

The survey was conducted by a combination of telephone interviews and online. The results were analyzed and collated and comprehensively supplemented by a series of in-depth interviews with senior institutional investment professionals.


Getting Your ESG Strategy Right


As our survey shows regulatory, stakeholder and other environmental drivers are increasingly making the need to find the right ESG investments solutions an urgent one. But we also know that performance is key to the right ESG solution, so we’ve developed the tools and solutions to help you meet your ESG and performance goals.

Proud signatories of the UNPRI, rated A+ for our firmwide strategy and governance of ESG investments and a leader in ESG investing for 30+ years, today we are integrating ESG directly into our investment processes. We have a full suite of ESG products to help meet your objectives.

Discover how we can help you get your ESG strategy right.

Disclosures

All charts and data are from the Into the Mainstream survey, published by State Street Global Advisors, as of November 2019.